China sinks P3 Network

COPENHAGEN:China's Ministry of Commerce (MOFCOM) has blocked the launch of the P3 Network by MSC, CMA CGM and Maersk Line citing "monopoly concerns".

Responding to the decision, Maersk said the three ocean carriers had agreed to stop plans on their vessel sharing agreement due to launch in the Autumn.

Vincent Clerc, chief trade and marketing officer for Maersk Line said the decision had come as a surprise as the three partners had "worked hard" to address China's concerns.

"P3 would have provided Maersk Line with a more efficient network and our customers with a better product. We are committed to continuing to be cost competitive and offer reliable services," he added.

The move follows approval of the P3 alliance earlier this year by the European Commission and the U.S. Federal Maritime Commission (FMC). In March the FMC said the agreement was "not likely to produce an unreasonable increase in transportation cost or an unreasonable reduction in transportation service".

China's decison will be good news for the Global Shippers' Forum (GSF) that had filed formal objections with the FMC and European Commission claiming P3 could restrict competition or collude on rates.

The move by China to block P3 could mean a similar fate for the G6 alliance of American President Lines, Hapag Lloyd AG/USA, Hyundai Merchant Marine, Mitsui OSK Lines, Nippon Yusen Kaisha, and Orient Overseas Container Line.

Maersk said P3 would have enabled it to use capacity more efficiently and so reduce costs and CO2 emissions. However group CEO Nils Andersen said he was confident his company would make the necessary improvements anyway: "It has delivered on those improvements over the last five quarters in the absence of P3 and I'm confident it will continue to do so." He said the lack of a P3 Network would have "no material impact" on Maersk Group's 2014 results.